Vital Energy (VTLE) Update - Dec 22

[dan_s]

This is good news: My updated forecast model for VTLE will be posted to the EPG website this afternoon.

TULSA, OK, Dec. 21, 2023 (GLOBE NEWSWIRE) -- Vital Energy, Inc. (NYSE: VTLE) ("Vital Energy" or the "Company") today announced the acquisition of additional working interests in producing assets associated with the recent asset acquisition from Henry Energy LP, Moriah Henry Partners LLC and Henry Resources LLC (collectively "Henry") for total consideration of $55 million.

The purchase will increase Vital Energy’s working interest in 45 wells by an average of 24%, increasing the Company’s estimated 2024 production by approximately 1,400 BOE/d (57% oil). The transaction is expected to increase Vital Energy’s 2024 Free Cash Flow by approximately $20 million, furthering Vital Energy’s deleveraging goals.

The transaction is associated with the exercise of tag-along rights by owners of certain assets in the Henry acquisition that enable Vital Energy to purchase and finance the assets on the same terms as the Henry purchase and sale agreement, in which the Company’s shares were issued at $54.96. Vital Energy funded the transaction through the issuance of 627,000 shares of its common stock and 595,000 shares of its 2.0% cumulative mandatorily convertible preferred securities.

"This transaction further demonstrates the opportunities provided by our increased scale in the Permian," stated Jason Pigott, President and Chief Executive Officer. "Our larger operating footprint across the Midland and Delaware basins continues to drive new efficiencies through bolt-on transactions that increase working interest or optimize our development plans by enabling longer laterals. As we successfully integrate these high-value acquisitions we expect to see continued gains in capital efficiency and stronger Free Cash Flow."

About Vital Energy

Vital Energy, Inc. is an independent energy company with headquarters in Tulsa, Oklahoma. Vital Energy's business strategy is focused on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin of West Texas.

Additional information about Vital Energy may be found on its website at www.vitalenergy.com.

[dan_s]

Three analysts have submitted new price targets to TipRanks this morning:

> Neal Dingmann at Truist Financial rates it a BUY with a price target of $72.00
> Tim Rezvan at KeyBanc rates it a BUY with a price target of $58.00
> Derrick Whitfield at Stifel Nicolaus rates it a BUY with a price target of $86.00

Neal Dingmann is one of the most highly respected energy sector analysts. His coverage and increased price target should draw more attention to VTLE from the Wall Street Gang.

As I mentioned on yesterday's webinar, I believe VTLE trades way below my valuation of $137.00 because it is still "off the radar screen" of the Wall Street Gang and lots of funds will not by upstream companies that don't pay dividends. IMO the best thing that Vital could do to increase the share price is to start paying a small dividend and announce a well-defined dividend policy.

TipRanks current forecast for 2024:
> Revenues of $1.9 Billion
> Net Income per share of $12.38
> Operating cash flow per share of $33.93 < IMO there is NO REASON that VTLE should be trading for less than 2X CFPS. It is free cash flow positive and has double digit annual production growth locked in.